Mileage boost “the right road” but wider reform still needed
The Association of Taxation Technicians (ATT) says the Chancellor’s decision to increase tax free mileage rates for people who use their own vehicles for work is the “right road to travel”, but further reform is needed to make the system simpler and fairer.
John Healey announced last night that the 55p per mile rate for the first 10,000 business miles will be made permanent, while the rate applying above 10,000 miles will increase from 25p to 35p per mile.
The changes will benefit employees and self-employed people who use their own vehicles for business, particularly those whose jobs require them to cover substantial distances.
The ATT had called for reform of mileage rates in a representation ahead of tomorrow’s Budget. While welcoming the earlier increase in the main rate to 55p, the Association highlighted the sharp reduction in support once someone exceeded 10,000 business miles and argued that the system should instead move to a single rate of at least 60p per mile.
Jon Stride, Chair of the ATT’s Technical Steering Group, said:
“This is the right road to travel, and will provide additional support to employees and the self-employed who clock up significant business mileage in their own vehicles.
“We highlighted ahead of the Budget that those travelling more than 10,000 business miles were particularly poorly served by the existing system, with the tax-free rate dropping sharply from 55p to 25p. Increasing the higher-mileage rate to 35p therefore partly addresses that concern.
“However, we still believe there is a strong case for going further. ATT proposed a simpler single rate of at least 60p per mile, which would remove the cliff edge at 10,000 miles and better reflect the costs of running and maintaining a vehicle.
“We would also like to see the Government address the rates for motorcycles and bicycles, which were left unchanged earlier this year, and commit to reviewing all approved mileage rates regularly so they do not once again fall significantly behind the costs faced by workers.”
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